CFTC sues Utah over state actions against registered prediction markets
Serguey Asael Shinder1 min readThe Commodity Futures Trading Commission has filed a lawsuit against Utah to stop the state from using its own laws to shut down CFTC-registered contract markets. The suit follows Utah's civil enforcement actions in state court against CFTC-regulated markets and other businesses, which the agency says obstruct Congress's decision to preempt state law.
Chairman Michael S. Selig said Utah "seeks to shut down prediction markets across a wide variety of markets" and argued that event contracts serve hedging and investment purposes and also give the public information about the outcome of future events. He said Congress made the CFTC the federal regulator with sole responsibility for these markets and that the agency would defend its exclusive jurisdiction over commodity derivatives.
The release says the CFTC has also started legal proceedings against nine other states and has filed briefs in four federal courts of appeal and one state supreme court.
What it means
This is no longer a dispute between exchanges and states with the regulator watching; the regulator is the plaintiff. Ten states in litigation, plus appellate briefs, means the preemption question is heading for a ruling that sets the boundary nationally. Until then, the practical position for registered event-contract venues is mixed: federally registered, but exposed to state enforcement wherever a court has not yet sided with the CFTC.